03.06.10

I’ll be traveling outside the United States for the Mozilla Summit, and I have a couple other distant vacation ideas which might involve leaving the country. When you spend overseas, you spend the local country’s currency, not your home country’s currency, exchanging one for the other when needed. The common wisdom seems to be that the most efficient and generally least expensive way to exchange currency for spending (when possible) is through a credit card. Most credit cards impose a “foreign transaction fee” on such transactions: a few percent, usually. I’m aware of one credit card that currently imposes no such fee: Capital One. (The Schwab Invest First Visa also charged no fee, according to reports, but that card’s been discontinued.) What other credit cards should I be aware of that charge no foreign currency fee? Does anyone have a recommendation for a good credit card primarily to be used for overseas purchases?

Most ideal would be if the card had no foreign transaction fee and no minimum usage requirements, but I can make some perfunctory use of it in order to avoid fees if necessary.

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The common wisdom seems to be that the most efficient and generally least expensive way to exchange currency for spending (when possible) is through a credit card.

Hell no. You’ll be charged fees for every transaction. Just get cash from ATMs in sizable chunks (eg. $200) to minimize the fees. Lots of small conversions will cost more.

The only hard part of this is estimating how much you’ll need; you can end up with some excess if you misjudge but you can always just convert it to USD once home again if you aren’t planning to go back any time soon.

It’s also much simpler. I mean, seriously, you’re thinking of getting a new credit card for a short trip to Canada?

I don’t have a suggestion, other than to mention that Capital One about two months ago started harassing us endlessly — as often as four times a week — with calls claiming there had been suspicious activity on our card, despite none such occurring. In fact, they would call asking about obvious no-brainers like Netflix — which has been billed monthly to that card, at the same price, for over four years. We’ve quit using the card because it got so completely out of hand.

Be aware that in Europe, the only credit cards that seem to be accepted almost anywhere are VISA and MasterCard, sometimes Diners or AmEx, not I rarely have seen any others. Also, in Europe, paying in restaurants, bars, or shops is almost exclusively done in cash, sometimes also with ATM cards, but rarely credit cards. Most bars and many restaurants don’t even take anything but cash.
So, when coming to Europe at least, I’d always have some cash of local currency with me.

Now, in Canada, esp. in the Vancouver-Whistler area, from all I’ve seen, they take US dollars (usually with a 1:1 exchange ratio for cash) and not sure what credit cards companies do, but they might just as well treat Canada just like domestic, not sure – at least might be different than for other countries.

Back when I lived in Michigan, it often could be pretty painless to spend Canadian dollars (well, coins really, and not loonies) since I was only a hop, skip, and a jump from the border, and it was more trouble to check than to just accept them as currency (not as an official policy, but people usually would regardless). The only problem were the coin-operated machines that explicitly said they rejected Canadian currency. Of course, back then the exchange rate made Canadian money worth significantly less than US money, something like $1 US per $1.50 Canadian.

I’m in Vancouver, am from the US. While many places will accept US dollars, many also do not, I’ve seen plenty of signs in places stating they do not. One explanation I heard for that is they have to actually go to the teller to deposit the money, rather than using the bag drop, which means a bank-hours trip. You will be charged fees on your credit card here, if they charge fees, just like any other foreign exchange. I would agree with njn, use your ATM card, I find that the least painful when traveling.

Check the exchange rates too – it’s no good being saving on the fee if you lose it on the exchange rate.

Regarding using cards in bars/restaurants, in Britain almost all restaurants and most bars will accept cards (credit and debit), but there might be a minimum spend (£5-10) or a transaction fee (50p). Visa, Mastercard and Maestro are accepted everywhere, Amex in some places and I wouldn’t even bother trying with any other type of card.

To clarify my earlier comment: often with international transactions you’ll pay a fee proportional to the transaction amount, but there will be a minimum fee. So paying lots of small amounts via a card will rack up the charges.

With respect to the Capital One card, perhaps they have no charges because they use a less favourable (to you) conversion rate.

A final thing: some banks have no-ATM-fee agreements with foreign banks. For example, Bank of America customers can use Westpac ATMs in Australia for no charge. (There’s still a currency conversion charge, but not ATM use fee.) That’ll save you around $2 per withdrawal.

Generally speaking if you’re smart about it, and do you’re homework, an ATM may be you’re best bet. You may only be paying a flat fee for using another ATM. In which case, plan a little bit (don’t take out $20 at a time) and you may only pay a few dollars for the whole currency conversion. Check with your bank.

In my case with CapitalOne, it’s $1.50 with a $500/day limit. Beats travelers checks, it’s more secure (don’t have to worry about loosing checks), and a pretty decent rate for the convenience of going to any ATM. Not to mention lots of places overseas only take a certain card (often just Visa or Mastercard) and travelers checks can be a drag to find a place willing to deal with them.

I think ATM is the best balance, but that depends on you’re bank, and what the convenience is worth to you.